Battle Over the Drake

Wed, 2007-12-19 15:45

The Wall Street Journal today has a look at the ongoing wrangling to turn the former Drake Hotel in New York City into a new mixed-use tower.

The highly leveraged Mr. Macklowe is developing an office-and-retail tower on the former location of the Swissotel's Drake Hotel on Park Avenue in midtown Manhattan, which he bought last year for $418 million. If he can get the $2 billion project under way -- especially with a big-name anchor tenant under lease -- it could create some breathing room on his balance sheet while he deals with other debt-laden projects.

To pull that off, though, Mr. Macklowe needs to enlarge the development site by also buying a row of small retail buildings that face East 57th Street. However, so far he has been unable to secure all of those buildings, and people familiar with the situation say the glitch lies at least with one building: 42 E. 57th St., home to Turnbull & Asser, a high-end men's clothier owned by Mr. al Fayed.

Mr. Macklowe has been thwarted because Turnbull & Asser has a long-term lease, and the owner doesn't want to relocate. "We are here to stay," said Paul Collins, chief financial officer for Turnbull & Asser, who declined to comment further.